Motorola Splits in Two--Why The Razr Was a Fluke And What The Company Needs To Do Now.

Motorola has decided to split itself in two—a failing mobile-phone business and a so-so network equipment/two-way radio/set-top box business. This is a default strategy. Motorola tried for months to sell its mobile phone operation and no one in Asia, Europe or North America would buy it. For good reason. The Razr was a fluke. Motorola was never an innovation-led company. It was a technology-driven company run by engineers who failed to understand the difference between technology and innovation. Let me explain. I saw the most amazing Motorola

technology coming out of its labs in China when I visited two years ago. Touch-screen cell phones, wonderfully articulated for the Chinese market. Motorola never integrated that technology into an innovation system that moved it from China to the US and mass market. Why? There was no innovation process, no regular, systemitized, standardized pipeline process that focussed on bringing out a steady stream of innovative products.

Engineers, loving their beautiful technology in separate labs for separate businesses, did their thing. And episodically, we got the walkie talkie and the wonderful Star-tac cellphone, still my own personal favorite. But, like the Razr, there was no real process. Each was a fluke.

The Razr came out of a little, skunk-works group working away from the main innovation/design operation. It was thin and beautiful--very traditional kind of design. But from the beginning, it had substandard, old software that drove consumers crazy. There was great software floating around Motorola, but it never got integrated into the Razr--even as they updated the brand.

So the Razr sold as a fashion item--on good looks. Nokia and then Apple blew it away with better functionality. People found their phones much more to offer, despite being less elegant.

Look at the companies on the S&P/Business Week Global Innovation Index. Motorola is currently in the index because it was based, in part on our 2007 survey of The Most Innovative Companies. It had a false reputation for innovation and the top manager respondents to the survey didn't get it. When the index gets updated in the weeks ahead as we come out with our new 2008 list of Most Innovative Companies, Motorola won't be on it. Companies that do technology right and get innovation wrong fail.

Motorola needs to bring in fresh managerial talent from the outside to reconfigure its business process. It needs to integrate it's dsign, technology and marketing operations to create an innovation process that is "owned" by consumers and that creates great new products and services for them. Not an easy task, but a necessary one.

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